The University of Montana Foundation touted the sale of its Montana Island Lodge to the highest bidder, but the Commissioner of Higher Education said he wished UM had procured more than $1.6 million to benefit the flagship.
"We're celebrating the fact that the University of Montana has these resources to put toward its mission this week," Cindy Williams, CEO and president of the UM Foundation, said Wednesday.
The UM Foundation had listed the Salmon Lake property in spring 2014 at $6.5 million, and its more recent listing offered the lodge for $2.49 million.
Commissioner Clayton Christian said he believed an earlier appraisal had come in well below $6.5 million, possibly around $3 million. He said he didn't know enough about the sale to be concerned about the amount, but he had hoped proceeds would be higher for the island and lakefront property.
"I'm a little surprised and disappointed in the sales price," Christian said. "Obviously, we want the foundation to maximize gifts and assets to the best they can for the benefit of our students."
The Montana Department of Revenue counts the market value of the property at some $5.1 million in all, with the island valued at $4.7 million and the lakefront acreage at $451,000 in 2017. But agency values can vary widely from actual sales prices.
In this case, Williams said the offer the UM Foundation accepted was the highest one any party has made for the unique 18,000-square-foot-lodge.
"The foundation did receive more than one offer to purchase the (Montana Island) lodge property. And the $1.6 million offer was the highest received and the highest ever received on the property in the time it's been for sale," Williams said.
Williams declined to share appraisals of the island and lakefront parcels, but she said the value of any property is ultimately the price a buyer will pay. Realtors informed decisions about the listing price, she said, and she made the decision to accept the $1.6 million offer in consultation with members of the governing board.
And the CEO said the market value of the property appears to be $1.6 million: "The value is really what someone will pay."
The Lipson family who owns the Resort at Paws Up paid cash for the Montana Lake Lodge and lakefront property, said Kirby Christian, the family's attorney. Kirby Christian is Clay Christian's brother; each said neither has any ownership interest in the property.
The Lipson family is the sole owner of the MEBC, the Montana Educational Benefit Company, which bought the lodge, said Kirby Christian. He said the Lipsons learned the price had been reduced, and they negotiated a fair amount given the condition of the property: "It does need work."
In an email, Larry Lipson said MEBC will contribute the real estate to a new charity the family is forming, the Montana Educational Benefit Foundation, and it will not be an extension of the resort. He said the foundation will be supported by the Lipson family and the community.
"The purpose of the foundation is to provide educational benefits to the state of Montana, which includes but is not limited to the support or sponsorship of scholastic events, seminars and publications," Lipson said. "The foundation plans to grant scholarships to qualified Montana students for advanced university studies.
"The Foundation (also) will host events for prominent educators in the fields of hospitality, culinary and training on the property."
In a phone call, CEO Williams said the Realtors did market the property, but she wasn't immediately prepared to cite a comprehensive list of all their strategies. She said they posted the property online, marketed it through a print publication, pushed it through social media, and discussed it with potential buyers.
She also noted the property is unusual, with 11 bedrooms and significant square footage, and the sellers always suspected it might not attract a private individual, but an entity that might use it for a function such as a group retreat. She said the UM Foundation has not retained any ownership in the Seeley Lake parcels.
Philanthropist Dennis Washington donated the property to the UM Foundation in 1995, according to UM. A donor agreement notes proceeds from the sale will be split among the four UM campuses, a UM official said earlier.
In January 2016, former vice president of finance Mike Reid said that the campus shouldn't drop the price too far below $6.5 million. That amount would allow UM to recoup roughly $1 million in maintenance costs through 2014 and receive a share of the remaining proceeds.
But Commissioner Christian said for whatever reason, the property hasn't attracted too many interested buyers. He said former UM President Royce Engstrom decided to list the property a few years ago partly because the flagship wasn't using the lodge and UM was busy with other efforts.
He said he understands the reason for the lower listing price given the earlier appraisal. However, UM has been in a budget crunch, and Christian said he wants the foundation to make the most of gifts to the campus.
"I'm not really in a position to second-guess it. Maybe that's what they thought they were doing. But I know certainly over the years, we'd hoped there was more of an asset there," Christian said.